Daily Mortgage Rate Lock Advisory

Daily Rate Lock Recommendation – 05/05/2008 12:52:00 PM EST

Monday’s bond market has opened fairly flat despite stock weakness. The major stock indexes are showing losses with the Dow down 53 points and the Nasdaq down 6 points. The bond market is currently down 3/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point over Friday’s rates.

This week is very light in terms of economic releases scheduled to be posted. There are actually three reports scheduled that are worthy of addressing, but none of them are considered to be highly important to bonds and mortgage rates. The Institute for Supply Management (ISM) Services Index was posted this morning and came in stronger than expected. However, the variance between the actual reading and the forecasted reading was not enough to cause much concern in the bond or mortgage markets.

The Labor Department will release its 1st Quarter Productivity and Costs data early Wednesday morning. This information helps u s measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rising, the bond market should react favorably. However, a decrease could raise inflation concerns that cause bond prices to drop and mortgage rates to rise Wednesday morning. It is expected to show a 1.5% increase in productivity.

March’s Goods and Services Trade Balance report will be released early Friday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is the least important of this week’s data.

In addition to this week’s economic data, we also have Treasury auctions that can influence bond trading and affect mortgage rates. The Treasury will hold a 10 year Note sale Wednesday and 30 Year Bond sale Thursday. Results of the auctions will be posted at 1:30 PM ET. If they were met with a strong demand fr om investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding could lead to higher mortgage pricing those afternoons.

Overall, I am expecting to see a fairly quiet week in mortgage rates, especially compared to last week’s volatility. As long as the stock markets remain fairly calm, I think the day to day changes in mortgage rates will remain relatively small.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Tags: balance report, bond, bond prices, closing, economic releases, employee productivity, Float, inflation concerns, institute for supply management, major stock indexes, mortgage markets, Productivity, quarter productivity, stock, treasury auctions, U.S., week

Daily Rate Lock Advisory – Friday Apr. 18th

Friday’s bond market has opened well into negative territory following early stock strength. Stocks are rallying in to the weekend with the Dow up 230 points and the Nasdaq up 60 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning rates.

There is no relevant data scheduled for release today, so the likelihood of bonds reacting to stock movements was fairly high. This means that the rally in the major stock indexes translates into bad news for mortgage shoppers this morning. The stock rally has caused investors to sell bond holdings, leading to this morning’s losses and mortgage rate increases.

Next week is very light in terms of economic releases scheduled to be posted. There are only three factual reports on the agenda along with a couple of Treasury auctions that sometimes influence bond trading. The first report is not scheduled for release until Wednesday morning, meaning stocks will likely be a major influence on bond trading and mortgage rates the first part of the week.

Look for more details on next week’s data and events in Sunday’s weekly preview.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2008

 

 

Tags: bond, bond holdings, closing, economic releases, factual reports, Float, major stock indexes, mortgage commentary, mortgage shoppers, negative territory, Release, stock, stock movements, stock rally, treasury auctions, week